HSBC Holdings Plc (HSBA), the British bank accused of laundering money for Mexican drug lords, apologized to investors for compliance failings as it set aside $2 billion more to cover the costs of regulatory fines and lawsuits.
The lender made a $1.3 billion provision in the first half to compensate British clients wrongly sold payment-protection insurance and derivatives, HSBC said in a statement today as it posted an 8.3 percent drop in net income. It also made a $700 million provision for U.S. fines after a Senate committee found the bank gave terrorists, drug cartels and criminals access to the U.S. financial system, a sum Chief Executive Officer Stuart Gulliver said may increase.
“Regulatory and compliance events in the first six months of the year overshadowed financial performance,” Chairman Douglas Flint said in a statement today. “HSBC has made mistakes in the past, and for them I am very sorry.”
HSBC, like its British competitors Barclays Plc (BARC) and Lloyds Banking Group Plc (LLOY), has been ordered by regulators to compensate clients sold interest-rate swaps that cost them money and insurance on mortgages and credit cards they didn’t require.
The lender apologized on July 23 to U.S. Senators for anti- money after the bank was accused of giving terrorists, drug cartels and criminals access to the U.S. financial system.
HSBC is also one of more than a dozen named in probes into the manipulation of the London interbank offered rate, for which competitor Barclays was fined a record 290 million pounds ($456 million) last month.
Bloomberg
